Thursday 12 November 2009

How Low Can You Go…

By John Ruddy, Irish retail analyst, editor of Checkout Ireland magazine and its weekly Retail Intelligence news service.
It may be unfair to lay all the blame for the troublesome ‘new’ consumer at the door of the global downturn, but the 2008/2009 recession certainly has a lot to answer for.

Reduced incomes have made Irish consumers more promiscuous (in terms of store choice), less brand loyal (vs PL) and, in every retail format, more price and promotion conscious.

To react to this, retailers operating in Ireland have had to respond in a number of different ways.

Swathes of PL have been shoehorned into virtually every category – bringing total PL penetration (including discounters) up to around 20%. Promotions have gone from being a bonus (for shoppers) to a must (for retailers), with most multiples now selling circa 30% ‘on deal’. And price communication – once secondary to niceties like provenance, locality and shopper experience – is now the foremost message for retailers of all sizes and formats.

With this experience being mirrored in countless other retail markets, there is nothing particularly new to report here. The real question, however, is how sustainable the current promotional levels are, and whether retailers who built their brands based on more than just a price message can revert to this brand image when things improve in a few years time….More on application to Superquinn, Aldi customer-count, consumer spend-reductions and reactions across the Irish FMCG sector in free paper

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